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The Scottish Policy Foundation has welcomed the launch of their co-funded project by the David Hume Institute into closing the 20% productivity gap between Scotland and the top quartile of OECD nations. The work examines other regions and nations which have successfully invigorated their own productivity growth and seeks to extract lessons from their experiences.

The comprehensive report, one of three to have been co-funded by the Scottish Policy Foundation in their first year of operation, found that Scottish productivity has slowed considerably in the last fifteen years, posing a risk to the improvement of living standards in future.

Among other significant findings, it was noted that Scottish business investment is relatively low, and we export from a narrow base of industries and firms. Further, despite having a well-educated workforce, its potential is not being maximised as a result of poor management quality and a high concentration of small, lower-productivity firms. Recent falls in Scottish education rankings for reading, science, and maths were also considered problematic.

The project presents three clear messages to senior decision-makers: new policy must be grounded in evidence; consensus between political parties, business, and trade unions is imperative; and reform must be underpinned by strong, credible institutions, independent of day-to-day politics.

Commenting on the report, Jane-Frances Kelly, Director of the David Hume Institute, said:

“Productivity in the Scottish economy has all but stalled over the past decade, and if we are to improve people’s living standards and open up new jobs and opportunities, there needs to be a turnaround.

“We are not the first country to face this challenge but – as our research shows – politicians and policymakers need to get their act together and make choices guided by evidence. Failing to do this will put the Scottish economy at risk.

“Our research has looked at Sweden, Ireland, Australia, Manchester and London – and in every case we found that a ruthless focus on evidence, building consensus across the political divide and creating strong institutions were crucial to turn things around. Attempts at short-term fixes will only result in this problem being kicked down the road, at the expense of jobs and growth.

“There is much we can achieve if politicians, policy makers and businesses really turn their minds to it.”

Alison Moore, Director of the Scottish Policy Foundation, commented:

“We are proud to have co-funded such a comprehensive, eye-opening piece of research, and we commend the David Hume Institute on their excellent work. ‘Wealth of the Nation’ continues the Scottish Policy Foundation’s focus on tackling Scotland’s productivity challenge – we hope this research will catalyse well-informed debate on how this goal is best achieved.”

media release - spf to fund new research by ippr scotland into productivity and inclusive growth

23 July 2018

Scotland’s grant-giving foundation for public policy research, the Scottish Policy Foundation, has announced the details of a new project that they will be co-funding to research how productivity can be improved at the same time as delivering inclusive growth. The research will be carried out by the independent think tank IPPR Scotland and will utilise the macro-economic model of the Scottish economy developed for the Scottish Policy Foundation by the Fraser of Allander Institute.

This new research builds on a number of projects that have been co-funded by the Scottish Policy Foundation on productivity and economic growth and continues the Foundation’s focus in its first year of operation on Scotland’s economy.

Productivity is one of the key drivers of the economy, and yet Scotland has a productivity gap compared with its international competitors. The choices around how to boost productivity include investing in skills, redesigning jobs, better business practices, investing in software and machinery and improving infrastructure. Each of these interventions would affect productivity but would also have an impact on social or economic inequality. This new research will consider what impact productivity growth may have on economic and social outcomes, such as low pay, career progression, poverty and employment, and will look at how productivity can be improved while also delivering inclusive economic growth.

Inclusive growth – one of the priorities of the Scottish Government’s economic approach - means growing the economy in a way that embeds reductions in inequalities, rather than tackling these inequalities through redistribution policies. The value of this new research will be in exploring these issues and looking at the policy options available to the Scottish Government to improve productivity at the same time as delivering inclusive growth.

The project will be led by the Director of IPPR Scotland, Russell Gunson, who said:

“We are delighted to have been awarded a grant from the Scottish Policy Foundation towards our research project on Scotland’s productivity and inclusive growth. Increasing productivity in different ways may have different effects on our economy and society, and while it is widely accepted that our economy needs to become more productive, looking at how this can be achieved in a way that narrows inequalities is crucially important.

“This research project is designed to consider these issues in depth and to explore new ideas and policy solutions that will deliver a stronger economic performance in Scotland in as equitable a way as possible. The project will also provide evidence that will help to shape the debate on the future of our economy and support scrutiny of future policy choices.”

Alison Moore, the Director of the Scottish Policy Foundation, added:

“This project builds on the work that we have funded to date on comparative productivity and the growth of small economies. As a Foundation with a remit to improve the quality and quantity of public policy research in Scotland, we recognise the value of this project in contributing to an important debate around the way in which our economy in Scotland should grow. We also welcome the fact that we are helping to support the capacity of a think tank in Scotland through our award.”

media release - reform scotland / david skilling report launched

7 June 2018

David Skilling, an economic adviser to governments, firms and financial institutions around the world, argues in a report published today that Scotland must learn from the experience of other small economies when setting its economic policies. The paper, “Policy insights for Scotland from small advanced economies”, has been written by Skilling for the independent think tank Reform Scotland and is part-funded by the Scottish Policy Foundation. It can be read here.

Skilling has researched a range of small economies, benchmarks Scotland against them and explores the issues such economies face today and will face in the future. Finally, he offers a view of the implications for Scotland of a range of policy decisions. In the report, Skilling emphasises that Scotland should:

recognise the importance of fiscal discipline, with an emphasis on controlling the quantity and quality of government expenditure, and on ensuring that taxes are competitive with other small economies

create economic upside by better using the devolved economic powers it already has

allow the debate over economic policy to be informed by the experiences in other small economies

recognise the importance of a coherent growth strategy with an emphasis on research, innovation and human capital

Commenting, Reform Scotland Director Chris Deerin said:

"This is an important contribution to Scotland’s economic debate by a respected global expert on small countries - a man who helped shape the findings of the SNP’s recent Growth Commission.

"The report is not about nationalism or unionism - it is about how we in Scotland can create the conditions for greater economic growth in order to raise our standard of living and better fund our public services.

"The lessons from the paper are clear. To achieve economic success, we must ensure our tax rates are competitive, that we have a high-quality business environment, and invest in human capital and innovation."

Alison Moore, the Director of the Scottish Policy Foundation, commented:

"As Scotland's grant-giving foundation for public policy research, the Scottish Policy Foundation is pleased to have been able to support this important piece of policy research on Scotland's economy. Our mission is to encourage a flourishing debate on issues of public policy that are important to us here in Scotland, and the Reform Scotland / David Skilling paper is one of a number that we are currently funding to add to the debate around Scotland's economy and productivity. This paper is a valuable addition to the debate on our economy, and we look forward to continuing to support this debate through our ongoing work."

media release: spf announces latest application round

26 April 2018

Grant giving foundation to consider new round of public policy research proposals when its Advisory Council meets on 25 May

SPF calls on think tanks from across the political spectrum to apply to test their policy ideas on its macro-economic model of the Scottish economy

Foundation aims to foster debate by supporting policy analysis and prescriptions from all political perspectives

Scotland’s grant-giving foundation for public policy research, the Scottish Policy Foundation, is today announcing that their latest application round will take place on Friday 25 May, when the members of the Foundation’s Advisory Council will meet to consider applications for support. The Foundation is inviting think tanks to consider applying for public policy research projects that utilise its macro-economic model of the Scottish economy, being developed in partnership with the Fraser of Allander Institute.

SPF was set up to counteract the lack of independent public policy research in Scotland by providing funding and support for think tanks to conduct such research. Its Advisory Council meets quarterly to consider applications. The members of the Foundation’s Advisory Council are: Rt Hon Douglas Alexander, Dame Elish Angiolini, Lord Andrew Dunlop, Jayne-Anne Gadhia, Lord John Kerr, and Rt Hon Angus Robertson. This will be the third meeting of the Advisory Council of SPF since its launch on St Andrew’s Day last year.

The Foundation has an ongoing collaboration with the Fraser of Allander Institute at the University of Strathclyde to make available a macro-economic computer model of the Scottish economy for think tanks to test out their policy ideas. The model is a detailed representation of the Scottish economy which captures the key relationships between firms, government and households and their interactions in the goods, capital and labour markets. SPF recently demonstrated the use of the model in exploring Scotland’s export market and has invited think tanks to consider testing their policy ideas utilising the model.

Announcing the Foundation’s next round of applications its Director, Alison Moore, said:

“Our priority areas for our first year of operation are education, economy and taxation, but we are particularly interested in receiving applications that look into the more specific issues around productivity, economic growth, and the future of the Scottish economy in relation to increasing digitalisation and automation.

“As we want to support projects that can make a real difference to the lives of people in Scotland, we are interested in proposals that are forward-looking, with realistic policy choices that can be implemented by policy makers. Our aim is to generate a debate on these issues by supporting proposals from organisations that represent all points of view across the political spectrum.

“The macro-economic model of the Scottish economy offers think tanks a valuable tool in testing our their policy proposals and the impact they may have. We encourage them to contact us to learn more about what the computer model has to offer.”

media release: SPF and FAI announce new research on scottish exports

Research finds that manufacturing accounts for half of Scotland’s export base, despite the economy being largely service-based

Fresh thinking and new ideas are needed to boost exports

SPF calls on think tanks from across the political spectrum to test their policy ideas to boost exports using SPF’s macro-economic model of the Scottish economy

The Scottish Policy Foundation and the Fraser of Allander Institute have released new research on the importance of exports to the Scottish economy. The research was carried out using a newly-developed multi-sector macro-economic computer model of the Scottish economy commissioned by SPF so that think tanks from across the political spectrum can evaluate policy ideas. This is part of SPF’s overall aim to promote a vigorous and vibrant culture of policy debate in and for Scotland.

The research was designed to demonstrate the implications of a rise in exports to the Scottish economy, looking at questions such as:

What is the split of manufacturing and services in Scotland’s export base?

What would happen if we increased our exports by 5%?

Exports provide an important source of external demand for goods and services produced by Scottish businesses, and there is evidence that firms that export become more productive and more competitive over time. The main findings of this new research are summarised below.

Scope to improve Scotland’s international export performance:

Including UK exports, Scotland has a higher ratio of exports to GDP than many other countries at 50%. But Scotland’s international export performance as a percentage of its GDP is just 20%. The EU average is 44%, and the OECD average is 28%, suggesting that there is significant scope to improve Scotland’s international trade performance.

Need to explore opportunities to broaden Scotland’s export base:

Scottish exports continue to be dominated by traditional markets like the US and the EU. Exports to emerging markets remain low: Scottish exports to Ireland are double those to China, and exports to Luxembourg are greater than to India. Manufacturing accounts for half of Scotland’s export base, despite the Scottish economy being largely service-based. Key growth sectors in recent years have been in food and drink, professional services and chemicals.

Need for small business export growth:

The total amount of international (i.e. outside of the UK) exports from Scotland in 2016 was almost £30 billion, with the USA being the leading destination, followed by the Netherlands, France and Germany. It is estimated that more than half of Scotland’s exports are accounted for by just 70 companies, with whisky exports being a significant contributor. In 2016, the Small Business Survey Scotland report found that just 16% of small businesses in Scotland had sold goods or services outside the UK in the past year. International exports from small companies are down nearly 7% since 2012.

The impact of boosting exports:

The Scottish Policy Foundation’s new macroeconomic model of the Scottish economy has simulated a variety of export demand shocks to identify the likely impact of different export-oriented policies. The model captures all the major impacts on the economy of a change in Scotland’s export performance. The ability to track such changes over time is a key strength of the multi-sectoral modelling approach used by the computer model.

The model simulation shows that, if there was a general uplift across all export sectors of 5%, reflecting the situation whereby a new trade deal was struck with a country, the following effects would be seen:

there would be an expansion in the economy, with an increase in output, tax revenues, employment and net investment;

this would put an initial pressure on prices, which would erode the competitiveness of Scottish exports to the rest of the UK;

wages would rise, and there would be an incentive for workers to migrate into Scotland;

over time, Scotland’s population and output would rise, and real wages would converge back to the UK level;

the sectors that mainly serve the domestic market or are labour intensive, such as public administration, would suffer from crowding-out in the short-run, but the model shows that all sectors in the economy benefit over the longer term.

Ongoing challenges to think tanks and the private sector:

Fresh thinking and new policy ideas are required to boost Scottish exports by developing an overall business environment that is conducive to a better export performance. The Scottish Policy Foundation exists to promote policy debate in Scotland across the political spectrum. SPF is inviting think tanks to test their policy ideas utilising the macro-economic model.

Alison Moore, Director of the Scottish Policy Foundation, commented:

Pictorial representation of the macro-economic model

“It is clear from the research that the Fraser of Allander Institute has carried out for us on Scotland’s export market that more analysis is needed on how Scotland can expand its export base. We are hoping that today’s release of this new research will act as a catalyst for think tanks in Scotland to develop policy ideas and test their effectiveness on the economy as a whole using SPF’s macro-economic model. We invite organisations wishing to undertake this work to contact the Scottish Policy Foundation to start the dialogue.”

Companies also require a greater ambition to export, and the capacity and capability to exploit opportunities. One such capability is productivity, which is crucial to export success. The Scottish Policy Foundation is co-funding a research project on productivity by the David Hume Institute, to investigate this area further.

media release: spf to fund research project into the growth of small economies

21 March 2018

The Scottish Policy Foundation is to co-fund a new research project with Reform Scotland and Landfall Strategy looking into issues facing small advanced economies and identifying lessons for Scotland to improve sustained economic performance.

The project will consist of several parts:

firstly, the recent economic performance of small advanced economies will be benchmarked against the equivalent performance of larger advanced economies, to enable the characteristics of high-performing small advanced economies to be identified;

secondly, the performance of Scotland’s economy will be compared to the group of small advanced economies, in particular those small economies that share specific characteristics with Scotland;

thirdly, the emerging issues that face small economies will be identified, such as their exposure to the changing political and economic environment, from technology to protectionism;

finally, a number of policy prescriptions for Scotland to raise its economic performance utilising its devolved powers will be identified and described.

The project aims to help frame a number of policy areas that are of particular relevance to Scotland in terms of improving its economic performance on a sustained basis. It will be delivered through a collaboration between Reform Scotland, an independent think tank that has been in existence for ten years, and David Skilling of the Landfall Strategy Group, a consultancy providing political and economic insights on small advanced economies.

Alan McFarlane, Chairman of Reform Scotland, commented:

“We are excited to have this opportunity to collaborate with the Scottish Policy Foundation to publish what looks set to be a very informative and important piece of research from David Skilling.

“The report will be published under Reform Scotland's Melting Pot banner, where we encourage guest authors to contribute to the public policy debate in Scotland.”

David Skilling, Director of the Landfall Strategy Group, added:

“The experience of small advanced economies around the world, from New Zealand to Denmark, has much insight for Scotland as it considers how to use its devolved powers to generate a sustained improvement in economic performance.”

Alison Moore, the Director of the Scottish Policy Foundation, welcomed the project:

“The Scottish Policy Foundation is pleased to be co-funding such an important piece of comparative research into the issues facing our economy in Scotland. The policy prescriptions for sustained economic growth that will come out of the project will be highly valuable for policy makers and politicians alike.”

MEDIA RELEASE - SPF ANNOUNCES NEW ROUND OF FUNDING

23 January 2018

The Scottish Policy Foundation has announced that their next funding round will take place on Friday 23 February, when the members of the Advisory Council will meet to consider applications for funding. The Foundation is inviting think tanks and other research organisations to submit applications for policy research in one of three policy areas: Scotland’s economy; Scotland’s tax regimes; and Scotland’s education sector. The Foundation has chosen these three themes as its priority areas for research for this year.

The members of the Foundation’s Advisory Council are: Rt Hon Douglas Alexander, Dame Elish Angiolini, Lord Andrew Dunlop, Jayne-Anne Gadhia, Lord John Kerr, and Rt Hon Angus Robertson. This will be the second meeting of the Advisory Council of SPF since its launch on St Andrew’s Day last year.

SPF was established to tackle the lack of independent policy research in Scotland by providing funding and support for think tanks to conduct such research. The Foundation has also partnered with the Fraser of Allander Institute at the University of Strathclyde to make available a computer model of the Scottish economy for use by think tanks, if required as part of their research projects.

The deadline for applications for this round of funding is Friday 9 February. Applications should be made online by visiting: www.scottishpolicyfoundation.org/apply. Any organisation that wishes to enquire further should contact the Director, Alison Moore, at: alison@scottishpolicyfoundation.org

media release - spf to fund new research into scotland's productivity

16 January 2018

The Scottish Policy Foundation is today announcing the details of a new research project that they will be co-funding to identify lessons from around the world for improving Scotland’s productivity. The project is to be carried out by the David Hume Institute, with the involvement of the Fraser of Allander Institute at the University of Strathclyde through the use of their macroeconomic model of the Scottish economy.

Productivity is a critical component of any economy. At the end of last year the Scottish Fiscal Commission cited productivity growth as a key factor in Scotland’s economic development over the next five years, yet, along with the rest of the UK’s, Scotland’s productivity has remained stubbornly 20% lower than the top OECD countries.

The project will compare Scotland’s performance on components of productivity with comparable countries and similarly-sized regions across the world. Where applicable, lessons for Scotland will be drawn from places which have significantly improved their productivity levels.

The research will be led by the Director of the David Hume Institute, Jane-Frances Kelly, who commented:

“Despite its clear importance to Scotland’s future, little independent policy work is carried out on the dynamics of the economy. By comparing Scotland’s performance with countries and similarly-sized regions around the world, we will identify evidence-based examples of success to help set expectations of what could be achieved here at home.”

Alison Moore, the Director of the Scottish Policy Foundation, welcomed their partnership with the David Hume Institute:

“As a new body that aims to increase the level of public policy research and debate by think tanks in Scotland, the Scottish Policy Foundation is particularly pleased to have the opportunity to co-fund an early research project on what is such a crucial issue to Scotland’s economy. We look forward to seeing the project progress and ultimately to helping to make a useful contribution to the research on our economy.”

Media release - launch of foundation

30 November 2017

The Scottish Policy Foundation was launched in Edinburgh on St Andrew’s Day, with the objective of addressing the current lack of funding for policy research in Scotland. The Foundation aims to be a major new source of funding for think tanks and other organisations to conduct research into areas of devolved public policy over the next few years.

The intention behind the launch of the Foundation is to increase significantly the resources available for the discussion and examination of policy options, not to support or endorse a particular policy outcome. Across the political spectrum there is a desire for an increase in independent research and analysis which can better inform policy making and debate in Scotland. It is intended that the Foundation could be a focus for the business community in particular, enabling participation in enhancing the effectiveness of Scotland’s policy debate and hence the prospects for society and the economy, without engaging in the political or constitutional debate itself.

The Foundation is independent and apolitical, concerned only with promoting good government in Scotland. To ensure its impartiality, a number of highly respected individuals from the political, legal and business spheres have been recruited to sit on its Advisory Council, which will scrutinise applications for funding and oversee the Foundation’s work.

The members of the Advisory Council include: former Labour Government Minister Rt Hon Douglas Alexander; former Lord Advocate Dame Elish Angiolini, who is now Principal of St Hugh’s College, Oxford; former Conservative Government Minister Lord Dunlop; Chief Executive of Virgin Money Jayne-Anne Gadhia; cross-bencher and former Ambassador Lord Kerr; and former Westminster Leader of the SNP Rt Hon Angus Robertson.

At the first meeting of the Advisory Council following its launch on St Andrew’s Day, the Foundation announced a partnership with one of Scotland’s foremost economic institutes, the Fraser of Allander Institute at the University of Strathclyde, to make available a macroeconomic model of the Scottish economy to think tanks and other research organisations as part of their funding support. PwC are supporting this work by providing technical advice on the computable model.

Professor Graeme Roy, Director of the Fraser of Allander Institute, welcomed their partnership with the Foundation:

“I am delighted that the Fraser of Allander is aligning with the Scottish Policy Foundation to allow think tanks and other research organisations to have much greater access to our independent economic modelling and expertise on the Scottish economy. This partnership will also enable us to develop and extend our modelling capacity which will bring new insights into the key opportunities and challenges facing the Scottish economy in the years ahead.”

Speaking about the launch, Douglas Alexander said:

“The Scottish Parliament has gained significant new powers over recent years, and to make the most of these powers demands the development of new policy ideas through rigorous research. I welcome the opportunity to be part of a new organisation that aims to address this need, and contribute to Scotland developing effective policy thinking over the coming years.”

Angus Robertson added:

“People of all parties recognise that, while there is a lively political debate ongoing in Scotland, there is still space for new ideas. I am delighted to be part of an organisation that will be able to help generate the new thinking that is required for a successful Scotland.”

Andrew Dunlop, who until recently was a Government Minister in the Scotland Office, commented on the need for greater resources to go into policy research north of the border:

“For some time now it has been clear that the funding available for policy research and analysis north of the border is woefully inadequate. The creation of a funding body which aims to rectify this situation is extremely timely and I am pleased to be able to play my part in its development.”

The think tank community have welcomed the creation of a new funding body to expand policy research in Scotland. Sir John Elvidge, Chair of the David Hume Institute, commented:

“The David Hume Institute warmly welcomes a new funding body in Scotland to extend the breadth and scope of the independent policy research that is vital to a flourishing democracy. We look forward to working with the Scottish Policy Foundation to contribute to the policy debate in Scotland.”

Russell Gunson, Director of IPPR Scotland, said:

“Scotland is facing huge opportunities and challenges whether on the economy, tax and benefits, public services, Brexit or our ageing population. We need independent research to deliver the thinking and new ideas to help us plot a successful path through them. As a charity, IPPR Scotland's crucial work would not be possible without external funding. The creation of the SPF is therefore very welcome and we hope will help to ensure more independent policy research can take place to support the strongest possible policy decisions in Scotland.”

The Scottish Policy Foundation is now open to applications from think tanks and other independent research organisations interested in conducting impartial and high quality policy research.